The Annuity Market in an Evolving Pension System: Lessons from Italy

Abstract

We describe the main characteristics of the Italian annuity market in a comparative perspective. We present for the first time a comprehensive dataset concerning annuity prices in Italy, and compute indicators of actuarial fairness (money’s worth ratios). It turns out that annuities sold in Italy are quite expensive with respect to the ones sold in other countries and to the ones offered by the public pension system. On the basis of the evidence gathered, we discuss the adequacy of current practices and regulation, and propose policies to increase efficiency and to speed-up the development of the market.